Edited by Doug Bandow and Ian Vasquez

For years, the assumption of traditional development economics
was that the Third World was poor because it lacked capital. Thus,
the suggested solution was to transfer wealth from the developed to
the developing world. Since the private sector was believed to be
unwilling or unable to bring prosperity to the poorest regions of
the globe, governments had to plan and manage their nations'
economies. And foreign aid would enable recipients to plan and
manage better. Alas, more than 40 years of international transfers
have not benefited the Third World. Not only is foreign aid based
on a flawed model of development, but there are other, more
practical problems inherent to such transfer programs. One is that
most development institutions, including multilateral aid agencies,
lend to governments, not people. Thus, the IMF, World Bank, and
other development banks have consistently made loans to the very
Third World governments that have created the worst impediments to
economic growth.

About the Editors

Doug Bandow
is a senior fellow at the Cato Institute, specializing in foreign
policy and civil liberties. He worked as special assistant to
President Reagan and editor of the political magazine Inquiry. He
writes regularly for leading publications such as Fortune
magazine, National Interest, the Wall Street
Journal, and the Washington Times. Ian Vásquez is the
director of the Cato Institute's Center for Global Liberty and
Prosperity. He is a member of the Mont Pelerin Society and has been
a term member of the Council on Foreign Relations. Prior to joining
the Cato Institute in 1992, Vásquez worked on inter-American issues
at the Center for Strategic and International Studies and
Caribbean/Latin American Action. His articles have appeared in
newspapers throughout the United States and Latin America including
the Wall Street Journal, the Washington Times,
the Miami Herald, the Financial Times,
Investors' Business Daily, El Comercio (Peru),
El Economista (Mexico), El Mercurio (Chile), and
El Nuevo Herald (U.S.).